The future of shredders will depend on balance in the marketplace

Any attempts to assess the future success of shredders begin with a look at demand. Judging by changes over the past decade, that future could be rosy.

Since 2001, overall demand for shredded material has increased by about 50 percent, making the fragmented scrap the most popular grade in the ferrous scrap market, according to U.S. Commerce Department figures. This growth was fueled by export demand, the operational capacities of mini-mills and breakthroughs in shredder technology.

Ten years ago, shredded scrap accounted for about 24 percent of all sales; today that figure has grown to 30 percent. A decade ago, shredded represented 33 percent of all export sales; last year it reached 40 percent. And in 2001 shredded scrap grabbed about 21 percent of all domestic scrap sales; that figure now stands at around 26 percent.

In raw numbers, an additional 6 million tons of U.S. shredded scrap were sold to domestic and foreign buyers last year compared with a decade ago.

In fact, shredded scrap overtook the heavy melting grades in 2007 for the top spot in scrap demand (it should be noted that some sellers throw heavy melting grades, No. 2 bundles and other material into their shredders). Because of this long trend, many scrap sellers have added shredder equipment to their yards.

But with the general economy still an open question, the new question is whether this trend will slow down or even stop in coming months. Opinions vary widely on this point, with some predicting a return to high levels of demand while others are more cautious.

"If mini-mills continue to see their orders increase, then it stands to reason there will be a greater demand for shredded scrap at some point in the process," said Charles Bradford, a metals analyst and president of New York-based Bradford Research Inc. "So in that scenario, shredders will continue to be an important part of the overall scrap market."

And there is room for growth, some in the industry say. An executive with an eastern U.S. metals company said that "most shredders are not operating anywhere near full capacity, so we havent even seen the limits of how much material can be prepared and sent into the market."

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